COMMUNICATION WITH CUSTOMERS THROUGH SOCIAL NETWORKS – EVIDENCE FROM THE REPUBLIC OF Višnja Bartolović1 Maja Validžić2

DOI: https://doi.org/10.31410/ITEMA.2019.159

Abstract: Consumer behavior and the buying decision process are influenced by social and personal factors. The subject of this paper is communication with customers through social networks in the eight largest Croatian companies. To this end, eight of the most well-known chains in Croatia were selected and analyzed in mid-2019, five of which are grocery stores and three are specialized drugstore chains. The paper aims to analyze the type and intensity of two-way communication (between retail chains and customers) through the social networks used by retail chains for promotional activities in the Republic of Croatia. Three social networks were analyzed: Facebook, Twitter, YouTube. A signif- icant proportion of retailers have recognized the benefits of advertising through social networks, but still, some have not recognized social networks as a platform for two-way communication between followers and retailers.

Keywords: Social Networks, Retail chains, Customers.

1. INTRODUCTION

arketing as a mechanism tries to identify customer needs and enable them to use products Mand services in an efficient and measurable manner. Online Marketing wants to provide information accessible to potential users and influence on their decision-making process of buy- ing goods at the market of final consumption (Nivetha & Sudhamathi, 2019).

Nowadays, the business environment is changing at a rapid pace and managers are under tre- mendous pressure of exchanging new information. Communication must be as accurate and fast as possible with as less interference as possible. In everyday life, as in management, successful communication is one of the most important skills that can be practiced (Kraljević, Perkov, 2014).

The role of promotion management is to effectively carry out promotional activities and the aim of promotional communication is to stimulate a reaction in the form of product purchases. For this process it is important to define the following aspects (Dobrinić, Gregurec, 2016): The target audience is determined by the marketing activities that precede the promotion as part of market segmentation, target market definition, market research, a) Communication (promotional) goals are highly dependent on overall marketing goals and are organizational and time aligned with them; b) Designing messages that, in addition to content, in the creation of the message, pay at- tention to the structure of the message and the source of the message (e.g. professionals or celebrities promote a particular product);

1 College of Slavonski Brod, Dr. Mile Budaka 1, Slavonski Brod, Croatia 2 College of Slavonski Brod, Dr. Mile Budaka 1, Slavonski Brod, Croatia 159 ITEMA 2019 Conference Proceedings

c) The choice of media depending on the form of contact, the media are divided into per- sonal (face-to-face conversation, letter, telephone marketing, internet in various groups) and impersonal (billboards, posters, TV commercials, etc.). Since direct contact is es- tablished with personal communication, feedback is immediately obtained, while this is not the case with impersonal communication channels; d) Feedback. Communication is successful if the recipient understood the message in the desired way. In order for the company to know that the promotion has been success- fully done, feedback is collected (e.g. by surveys, but ultimately by the final customer response in the form of product purchases). It could be said that the best feedback is product sales statistics and a financial report.

Advertising is a paid, mass form of communication. Considering the channels that are used, advertising is generally impersonal. The aim of advertising can be to inform the target audience and create awareness about the existence of a new product, its characteristics, usefulness, etc. Information activities are especially important in the phase of product launch. Other advertising goals are persuasion, reminder and additional confirmation (Kotler, Keller, 2008 p. 569).

In the second half of the twentieth century, when marketing began to be taken as a serious and one of the key factors in the business of a company, a scientific discipline began to develop, studying the psychology and behavior of consumers. „Market experts have realized that the goals of the company will be easier to achieve if they consider the needs of consumers and offer them a range of products and services on the market that will better meet their needs” (Grbac, Lončarić, 2010, p. 16)

Consumer behavior and marketing are two concepts that are inseparable from one another, because „marketers should know how consumers think, feel, and behave in relation to subjects, places, ideas, and other objects in a particular space and time” (Grbac, Lončarić, 2010, p. 18).

After researching the consumer preferences, based on the results obtained, the marketing mix – color, size, packaging and main features of the product – is defined and determined. Next step is to define prices and pricing strategies, for example, to put a high price and promote the product as exclusive and approve periodic discounts or to put as lower price as possible, attract consumers on that way, etc. Given all the above, it is also determined in which stores the prod- uct should be available and what forms of communication to use to attract consumer attention (Grbac, Lončarić, 2010).

„As a scientific discipline, consumer behavior is defined by Kotler and Keller who point out: Consumer behavior is the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, ideas or experiences to meet their own needs and desires” Gr- bac, Lončarić, 2010, p. 19).

When researching and studying customer behavior, the priority is not to monitor consumption, but rather behaving while making a purchase decision, during the purchase process itself, and to continue to use or discard the product (Grbac, Lončarić, 2010).

For marketers, it is important to study the level of customer satisfaction of a product or service and why the customer is satisfied or dissatisfied to adapt marketing tactics and the product itself, all for the sake of greater consumer satisfaction and ultimately for the achievement of company goals.

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2. COSTUMER BEHAVIOR AND BUYING DECISION PROCESS

Consumer behavior in the interaction with the environment is constantly changing and no mat- ter how much is researched, there will always remain certain unknowns. In the modern age of rapid change and the use of computers, scientists have realized the importance of seriously researching the effects on customer behavior, so some theoretical models have been developed to help frame how certain stimuli affect an individual and thus analyze and „measure” them (Kesić, 1999).

As noted earlier, purchasing decisions are influenced by a variety of components and factors, both external and internal. Purchasing decisions can be made rationally, based on careful con- sideration, but can also be made spontaneously. There are five stages to the decision-making process: cognizance of the problem, seeking information, evaluating alternatives, deciding to buy, and post-purchase behavior (Grbac, Lončarić, 2010, p. 141).

Earlier it was stated that the customer has a specific motive to buy a product. The motive is mainly the desire to satisfy one of the needs or desires of the customer and in order to realize the purchase, the individual must be aware of that need. This is a phase that encourages the consumer to be active.

Awareness of the problem is the discovery of the difference between the state in which the consumer is in relation to the state in which he or she would like to be. The greater the difference between these two conditions, the greater the motivation to solve the problem. For example, if a person’s car breaks down constantly, they will be aware and motivated to buy a new car, and if they have a relatively good car, they will not easily decide on a better version of an existing one. Realizing of the person that he/she have the problem is influenced by perception, and perception is influenced by the internal and external factors mentioned in the previous chapters. It is the job of marketers to stimulate consumer recognition of the problem, that is, to create an idea of need, even if there is none. After becoming aware of the need, the consumer will start collecting infor- mation on the existence and availability of the product / service, product characteristics, as well as pricing information, and will evaluate alternative options based on the information collected. The consumer first begins with an internal search for information (he remembers everything he knows about that product category, looks at product brands, remembers his own experiences with the product, etc.), then, in order to collect additional information, he moves outside to col- lect information (Grbac, Lončarić, 2010). Consumer information sources are diverse and some are managed by marketers. Sources managed by marketers are „important sources for generating awareness and stimulating product interest among consumers” (Grbac, Lončarić, 2010, p. 148)

In addition to marketing, personal sources such as family, friends, work colleagues, as well as previous product experience are an important source of information. This is a category of infor- mation sources that the consumer particularly trusts. The third group of information sources are independent sources, such as specialized magazines, special websites, etc. When buying every- day used products, the consumer does not engage too much to find information about them, so the ideal marketing strategy for such a product group is to advertise intensively how to help the customer recall the product more quickly and to make it known to him, while for high-risk products, marketers need to ensure that information from relevant sources is available to the consumer. After the consumer has gathered information about the products, he will choose one of the alternatives – mostly one that he thinks is a better solution for him. Advertising informs

161 ITEMA 2019 Conference Proceedings the public about opening a branch, offering and assortment of a shop and current actions, and for this purpose, mass media are often used – TV advertisements, advertisements on the Internet, advertisements in print media, leaflets in mailboxes and the like. Brands can also be a reason why a shopper will choose a store (Grbac, Lončarić, 2010).

In a sea of many diversified products, manufacturers need to ensure the brand recognition of their product through quality brand management, but for good business results they have to adapt their approach to retail stores and their customers. „This approach to shoppers in retail, by manufactur- ers and retailers, is often referred to as shopper management” (Muller, Singh, 2006, p. 85).

When it comes to retail customer behavior, it is important to know who the customer is and what is important to them, what are the key factors that influence their behavior and which of these factors may be affected. In order for retail stores to better position themselves and reach targeted consumers, they need to identify and segment people with similar characteristics. Customers thus differ in their behavior, attitudes, dynamics, and social and demographic characteristics. Once the target group has been identified, an access strategy is defined (for example, families with young children spend more than couples without children, which is why many retailers have special baby loyalty programs and loyalty cards) (Muller, Singh, 2006).

3. RESEARCH BACKGROUND

The survey collected data on observed companies in the following categories: global rank, coun- try rank, total visit per domain, device distribution (desktop vs. mobile), Engagement (Monthly visits, Unique visitors, Visits / unique visitors, average visit duration, pages per visit and bounce rate), Channels overview and Social traffic.

The first part of the survey will show data for the TOP 5 companies in activity4711 Retail sale in non-specialized stores mostly food stores, beverages and tobacco (Konzum, Croatia, Plodine, Kaufland Croatia, Croatia).

And, the second part of the survey collected data from the TOP 3 companies in activity 4719 Oth- er retail sale in non-specialized stores (Dm-drogerie markt, Müller shop , Bipa). These are companies operating in the Republic of Croatia, although established in other countries (Ger- many, Austria). There are only two domestic companies in the TOP 5: Konzum and Plodine.

For the purpose of the research, the five largest retail chains operating in the Republic of Croatia were selected: Konzum, Kaufland, Lidl, Plodine and Spar and the three largest drugstore retail chains DM, Bipa and Mueller.

According to the business data of the top ten retailers, these five selected retailers (Konzum, Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia) hold close to 72% of the market with HRK 24.2 billion. Dm-drogerie markt is in eighth place in terms of sales revenue on the same scale, therefore it is in the TOP 10 retail chains in the retail sector (Institute of Economics Za- greb, 2019). Konzum plus d.o.o. (formerly Konzum dd) is the largest Croatian retail chain with a share of about 30% in the Croatian market. Konzum plus, having around 10,000 employees, is one of the largest employers in the country and has as many as 500,000 purchases every day in over 600 Konzum stores. (Konzum.hr official site, 2019). One of the most well-known consumer goods retailers is certainly Kaufland. It is part of the German Schwarz Group, which

162 COMMUNICATION WITH CUSTOMERS THROUGH SOCIAL NETWORKS – EVIDENCE FROM THE REPUBLIC OF CROATIA also owns Lidl. The first store in Croatia, opened in 2001 in Karlovac. By 2009, Kaufland had twenty-five branches in Croatia, while today there are 39 (Kaufland.hr official site, 2019).

Lidl is its first 13 stores in Croatia in 2006. Today in Croatia Lidl operates 93 stores throughout Croatia (Lidl.hr official site, 2019).

Spar is the Austrian chain of stores that opened the first Interspar hypermarket in Zadar in 2005. Since 2009, a market format known as Spar has been created and first opened in Varaždin in 2014. Today, Spar in Croatia has a network of stores of 93 (Spar) and 21 hypermar- kets (Interspar) and employs over 4300 employees (Spar.hr official site, 2019).

The first Plodine store was opened in 1993 in Rijeka, and in the beginning of 2000, it started with more significant openings of modern-day supermarkets. Today, there are 83 supermarkets operating in Croatia, with more than 3,500 employees (Plodine.hr official site, 2019).

The first DM store in Croatia was opened in Zagreb in 1996, and today there are 157 in Croatia and employ about 1500 employees (DM-drogerie markt.hr official site, 2019). The first Müller store opened in Zagreb in 2006, and there are currently 18 of them. At the beginning of 2017, he took over Kozmo drugstores and thus approached DM in business and income (Müller official site, 2019).

The first Bipa store in Croatia opened in 2007 in Vinkovci, and today has more than 100 branch- es and over 600 employees (Bipa.hr official site, 2019).

4. RESEARCH RESULTS

According to the National Classification of Activities, these 8 enterprises are classified into two types of activities: • Activity 4711 Retail sale in non-specialized stores with food, beverages or tobacco pre- dominating (Konzum, Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia), • Industry 4719 Other retail sale in non-specialized stores (Dm-drogerie markt, Müller shop Zagreb, Bipa).

A study by the Competition Agency shows that in the food and groceries sector in 2017, the market concentration indicator for the top ten traders was 82.2 percent, unchanged from 2016, while the concentration indicator for the top five retailers accounted for 66.2 percent in 2017, an increase of 65.1 percent from 2016 (Institute of Economics Zagreb, 2019). The position of TOP 10 retail companies in the ranking in the Republic of Croatia is shown in the table:

Table 1. Sales revenue 2017 Company Sales revenue (in billions of kn; kn1 = €0.13) Konzum 8,9 Lidl Hrvatska 4,6 Plodine 3,8 Kaufland Hrvatska 3,5 Spar Hrvatska 3,4 Dm-drogerie markt 1,7 Müller trgovina Zagreb (Fininfo.hr) 1,4 Bipa (Fininfo.hr) 0,46 Source: Institute of Economics Zagreb, 2019, Fininfo, 2019

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Table 2. Displaying the number of followers on social networks and YouTube channels in Croatia on 30th August 2019 Instagram follower / YouTube channel Retail chain: Likes on Facebook posts / video subscribers Kaufland 216 000 13 600 – 182 1 700 – 220 Konzum 254 300 10 400 – 506 / – 1300 Lidl 377 000 72 600 – 820 5 200 – 1 700 Spar 173 400 1 291 – 124 474 – 536 Plodine 210 300 1 699 – 45 225 – 699 DM 495 000 153 000 – 1623 13 000 – 2 200 Müller 105 500 4 495 – 150 - Bipa 463 800 88 900 – 802 1 100 – 135 Source: authors

The data in Table 2 shows that all the chains are active on social networks. Of the consumer goods stores on Facebook and Facebook followers, Lidl.hr has the most likes, while in drug- stores market Dm-drogerie markt.hr holds the advantage. The surprising chain is certainly Müller.hr, which has Facebook likes on all eight stores, and has relatively few followers on In- stagram and on YouTube channel (or not easy to find, which also supports the fact that they are not overly engaged). Instagram is a social network where trends such as fashion and beauty are mostly represented, so it is to be expected that drugstores – DM-drugstores markt.hr and Bipa. hr have the most followers of the observed eight retail chains, followed by Lidl.hr.

4.1. Activity 4711- Retail Sale in Non-Specialized Stores Mostly Food Stores, Beverages and Tobacco (Konzum, Lidl Croatia, Plodine, Kaufland Croatia, Spar Croatia)

According to Website Analysis Overview Report, period between August 2019-October 2019, Country Rank for selected companies are shown in figure 1.

Figure 1. Global and country rank of compared analysed sites Source: Website Analysis Overview, 2019

Next analysis is number of total visits. Number of total visits represent sum of all visits per time period (August-November 2019).

Next figure 2 shows number of total visits per domain:

Lidl Croatia is leading retailer in total visit per domain (46 %). Konzum has 22 % of total visits. On 3rd place is Kaufland with 17 % of visits, on th4 place is spar.hr and 5th is Plodine.

164 COMMUNICATION WITH CUSTOMERS THROUGH SOCIAL NETWORKS – EVIDENCE FROM THE REPUBLIC OF CROATIA

Figure 2. Domain Source: Website Analysis Overview, 2019

Next figure 3 shows device distribution in the same period. Device distribution shows percent of incoming traffic from desktop vs. mobile web. Lidl Croatia has leading position in this segment and the reason is in good quality of mobile app.

Figure 3. Device distribution (desktop vs. mobile web) Source: Website Analysis Overview, 2019

Next figure 4 shows Engagement. The average engagement metrics are calculated for the selected time range. Lidl has leading position in monthly visits, unique visitors. Konzum has leading posi- tion in average visit duration and bounce rate. Spar has leading position in number of pages per visit.

Figure 4. Engagement Source: Website Analysis Overview, 2019

Next figure 5 shows Marketing Channels: direct channel, e-mail, referrals, social channel.

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Figure 5. Marketing Channels Source: Website Analysis Overview, 2019

Most of incoming traffic comes from direct marketing channels, and from organic search. In direct channel Konzum has 32,37 %, Kaufland 33,7 %, Plodine 28,37 %, Lidl 49,37 % and Spar 24,75 %. Marketing Channel “Social” shows next metrics: Konzum 2,52 %, Kaufland 4,05 %, Plodine 1,9 %, Lidl 2,14 %, Spar 0,93 %.

Social traffic is shown in the next figure – Leading social networks that drove traffic to the se- lected site on desktop.

Figure 6. Social Traffic Source: Website Analysis Overview, 2019

According to Figure 6 Social Traffic (Desktop Only-Facebook on Croatian market) shows that Plodine (90,46 %) and Kaufland.hr have leading position. Lidl.hr have 84,8 % social traffic on Facebook, Konzum 75,28 % and Spar 56 %. On YouTube Spar.hr has leading position (39,83 %), Konzum has 20,51 %, Lidl.hr has 15,05 %, Kaufland.hr 8,37 % and Plodine.hr 3,99 % of Social Traffic. Twitter are using only Konzum (0,86%), and Spar.hr (4,17 %). Complete different situation for these retail chains is on their domestic market. For example, Kaufland.de uses Facebook in 49,08 % and YouTube in 35,18 %, on market. Lidl.de uses Facebook (42,75 %), VKon- takte 23,71 % and YouTube 23,43 %. Spar.at uses Facebook 50,871 %, and YouTube 43,07 %.

4 .2. Activity 4719- Other Retail Sale in Non-Specialized Stores (Dm-Drogerie Markt.hr, Müller.hr, Bipa.hr)

According to Website Analysis Overview Report, period between August 2019-October 2019, Country Rank is showed in figure 7. Next analysis is number of total visits. Number of total visits represent sum of all visits per time period (August-November 2019).

Figure 8. shows number of total visits per domain. Dm-drogerimarkt.hr is leading retail chain in total visit per domain with 74,10 % share of mobile device distribution.

166 COMMUNICATION WITH CUSTOMERS THROUGH SOCIAL NETWORKS – EVIDENCE FROM THE REPUBLIC OF CROATIA

Figure 7. Global and country rank of compared analysed sites Source: Website Analysis Overview, 2019

Figure 8. Total Visits and Device Distribution Source: Website Analysis Overview, 2019

Next figure shows Engagement. The average engagement metrics are calculated for the selected time range. Dm-drogerie markt.hr has leading position in monthly visits and unique visitors. Mueller.hr has leading position in average visit duration, bounce rate and leading position in number page per visit.

Figure 9. Engagement Source: Website Analysis Overview, 2019

Most percentage of incoming traffic comes from direct marketing channels, and from organic search. In direct channel dm-drogerie markt.hr has 11,82 %. Mueller.hr 17,78 % and Bipa.hr 28,03 %. Marketing Channel “Social” shows next metrics: Bipa.hr has 3,04 %, Mueller.hr 3,19 % and dm-drogerie markt.hr 2,83 %. Social traffic is shown in the next figure.

Figure 10. Channels Overview Source: Website Analysis Overview, 2019

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According to Figure 6 Social Traffic (Desktop Only) shows that Facebook is leading social net- work in communication with customers. YouTube is 2nd. Very interesting data for dm-drogerie markt.de on German market shows that dm-drogerie markt.de in Germany use YouTube similar as Facebook (41,7 % on YouTube vs. 42,26 % on Facebook). The same case is also for Mueller. de, which uses Facebook in 57,62 % vs. YouTube 27,96 %. The same case is also for Bipa.at. Bipa in Austria uses Facebook and YouTube 58,04 % vs. 34,00 %.

Figure 11. Social Traffic Source: Website Analysis Overview, 2019

5. CONCLUSION

Social networks are a platform where businesses can promote themselves and reach customers. With every announcement, feedback is immediately obtained in the form of likes and com- ments, allowing the promotional campaign to be immediately refined and promoted.

The analyzed data indicate that Facebook is the largest social network used by chains in both types of retail activity observed.

The paper aims to analyze the type and intensity of two-way communication (between retail chains and customers) through the social networks used by retail chains for promotional activ- ities in the Republic of Croatia. Three social networks were analyzed: Facebook, Twitter, You- Tube. A significant proportion of retailers have recognized the benefits of advertising through social networks, but still, some have not recognized social networks (Mueller on YouTube) as a platform for two-way communication between followers and retailers.

On the Croatian market, foreign retail chains with headquarters in Austria and Germany use Facebook the most, while in their domestic markets (Germany and Austria) they use almost equally Facebook and YouTube.

For example, Mueller.hr does not use YouTube in the Croatian market at all, while its remain- ing two competitors use YouTube on the Croatian market as a channel of communication with customers.

Mobile web has a leading position as opposed to a desktop device. As a recommendation for further research into the use of social networks in retail chains it would be advisable to observe connection between the behavior of the population by age and the preferred social network, also preferred method of communication (desktop vs. mobile web).

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Bipa.hr official site:https://www.bipa.hr/ (26. August 2019.) DM-drogerie markt.hr official site: https://www.dm-drogeriemarkt.hr/hr_homepage/ (26. Au- gust 2019.) Dobrinić, D. & Gregurec, I. (2016). Integrirani marketing. Varaždin, Croatia: Fakultet organ- izacije i informatike. Grbac, B. & Lončarić, D. (2010). Ponašanje potrošača na tržištu krajnje potrošnje. Rijeka, Cro- atia: Ekonomski fakultet Rijeka. Institute of Economics Zagreb: Sektorske analize, https://www.eizg.hr/userdocsimages/publik- acije/serijske-publikacije/sektorske-analize/sa_trgovina_2019.pdf Kaufland.hr official site:https://www.kaufland.hr/ (25. August 2019.) Kesić, T. (1999). Ponašanje potrošača. Zagreb, Croatia: Adeco. Konzum.hr official site:https://www.konzum.hr/ (24. August 2019.) Kotler, P. & Keller, K.L. (2008). Upravljanje marketingom, 12. izdanje, Zagreb, Croatia: Mate d.o.o. Kraljević, R. & Perkov, D. (2014). Menadžment tržišnih komunikacija. Zagreb, Croatia: Liber- tas-Plejada. Lidl.hr official site:https://www.lidl.hr/hr/index.htm (25. August 2019.) Muller, J. & Singh, J. (2006.): Category management, Zagreb, Croatia: Internacionalni centar za profesionalnu edukaciju. Müller.hr official site:https://www.mueller.hr/ (26. August 2019.) Plodine.hr official site:http://www.plodine.hr/ (25. August 2019.) Portal Fininfo, https://www.fininfo.hr/Poduzece/Pregled/mueller-trgovina-zagreb/Detal- jno/83907 Similar web: Website Performance, https://pro.similarweb.com/#/website/worldwide-overview/ dm-drogeriemarkt.hr,mueller.hr,bipa.hr/*/999/3m?webSource=Total Similar web: Website Performance, https://pro.similarweb.com/#/website/worldwide-overview/ konzum.hr,kaufland.hr,plodine.hr,lidl.hr,spar.hr/*/999/3m?webSource=Total Spar.hr official site:https://www.spar.hr/ (25. August 2019.)

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